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Is there an optimal age to convert your ROTH IRA?

In this video, we’re going to talk about the best age to convert your Roth IRA and how to pay the least amount of tax when doing this. And also the timing of when to do this. There are a lot of factors that come into play, so you’ll really want to talk and make sure you do these projections with a good CPA or a good financial planner. But, uh, the most, there’s, there’s one age that we see are really an age range where we see the most people start to convert their IRAs and pay the, uh, the minimum amount of tax. And this is the period of time where they have a little bit more control over the income that they’re receiving. It’s the age between 60 and 70, and it’s a period of time where after they stop working and before they start social security.

So this is the time when it’s critical really before this age, is when you start planning for your specific retirement income withdrawal strategies. But this is the actual period of time where you have a little bit more control over, uh, what you’re going to start to use as income these years. And this is the time when Roth conversions seem to be the most popular. And the reason why that is because we’ve got control over income here. That’s when you also have control over tax and how much tax you’re gonna pay or what sort of income is going to be taxable. Because when we do a Roth conversion from traditional IRA to Roth, any money that you do with that conversion is considered taxable that year. So if we’re in this period of time and there’s no social security and we have other investments or bank, uh, cash to use, it could be a good time to, to flip that switch and start to do the conversions when we’re in a low-income tax bracket.

So then the big question is if we’re not using our IRA monies and if we’re not starting social security yet, where are we going to get income? What are we using to live on? Well, the people that have done this right start to plan ahead and they start to build up their non-retirement money is maybe money in the bank or money in a taxable account that they can start to use and uh, really build up the first few years if they’re planning on doing this conversion strategy. So if you’re not in this age range yet, but you’re going to be and you’re thinking of, um, of doing Roth conversions, then now’s the time to start thinking about this side, uh, money that’s gonna be funding you, uh, during this period of time. So then the next big question is what’s the right dollar amount to convert?

So this is where a good CPA and a good financial planner comes in handy cause you can do a tax projection before you actually convert anything. So you know the outcome before you actually do it. And I recorded another video on the Roth conversion sweet spot where we’re using these different gaps between tax brackets to think about when you’re doing Roth conversions.

Disclaimer: Since we don’t know your specific situation, none of this information should be construed as tax, legal, financial, insurance, financial advice, or other advice and may be outdated or inaccurate. It is your responsibility to verify all information yourself. This content is prepared for entertainment purposes only. If you need advice, please contact a qualified CPA, attorney, insurance agent, financial advisor, or the appropriate professional for the subject you would like help with. Streamline Financial Services, LLC or its members cannot be held liable for any use or misuse of this content….(read more)

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